Strait of Hormuz Disrupted, Aramco Profit Still Soars 33 Percent

Saudi Aramco's office. Aramco's adjusted net profit jumped 33 percent in the second quarter despite disruptions to oil supplies through the Strait of Hormuz. Photo: Energy Connects.

JAKARTA - A major disruption in the Strait of Hormuz did not make Saudi Aramco lose power. The Saudi Arabian oil giant still recorded a net profit of $33.4 billion in the second quarter, up 33 percent compared to the same period last year.

Arab News, quoted Tuesday, August 4, reported that Aramco was able to maintain production and exports to global markets despite the disruption of oil flows through the Strait of Hormuz. This route is important because it is usually passed through about a fifth of the world's oil trade.

Aramco's board of directors set a second-quarter base dividend of $21.9 billion. The dividend will be paid in the third quarter.

The decision was taken when Aramco's free cash flow fell to 12.3 billion US dollars from 18.6 billion US dollars in the previous quarter. Aramco said the decline was mainly driven by a 13.6 billion US dollar increase in working capital.

Free cash flow is the funds left over after a company finances operations and capital expenditures. This figure is often used to see a company's ability to pay dividends, pay off debt, or finance expansion.

Aramco's net debt-to-equity ratio or gearing rose to 6.2 percent from 4.8 percent at the end of March. However, the figure is still close to the 6.5 percent position a year earlier.

Data from the US Energy Information Administration or EIA showed crude oil and petroleum liquids passing through the Strait of Hormuz fell nearly 30 percent to 14.6 million barrels per day. A year earlier, the volume reached 20.4 million barrels per day.

President and CEO of Aramco Amin Nasser said the company's ability to survive amid the disruption did not come suddenly.

"Despite the unprecedented supply disruptions through the Strait of Hormuz, we continue to demonstrate our ability to maintain business continuity by utilizing our diverse asset base and decades of planning, including strategic infrastructure such as the East-West Pipeline, storage capacity, and export terminals," said Nasser.

According to Nasser, the infrastructure has enabled Aramco to maintain production and exports, while continuing major projects amid challenging regional circumstances.

In an interview with Arab News, economist Jasem Ajjaka said Aramco's performance was important because it came at a time when markets were volatile and regional geopolitical uncertainties were increasing.

"Aramco was able to overcome logistical issues and disruptions related to the Strait of Hormuz, as well as avoid high costs for logistics services, so that crude oil prices became the main factor behind this profit," said Ajjaka.

He added that Aramco's ability to withstand physical risks due to the Iranian attack also helped the company's performance. The damage was said to be insignificant and did not have a material impact on operations.

Aramco revealed that a number of facilities owned by the company and its affiliates in Saudi Arabia were targeted in the second quarter and again in July. As of June 30, the impact was said to be immaterial to its financial position, operating results, or cash flows.

In the performance presentation, Nasser said Aramco had three export routes, namely the Arabian Gulf, the Red Sea, and the Mediterranean. The company also uses the East-West Pipeline and international storage in Asia, Europe, and the Middle East to maintain supplies to customers.

Nasser said Aramco's contingency team recovered the affected assets about six times faster than similar companies in the industry. The recovery was supported by a supply chain with 70 percent local content.

Ajjaka assessed that Aramco's dividend payments, which continued, showed the company's flexibility.

"Flexibility is seen in the East-West Pipeline alternative, which is used when transportation through the Strait of Hormuz is disrupted. Strong storage capacity also plays a role as a cushion, so that operations continue without interruption," he said.

The rise in oil prices was the main support. Revenue and other income related to sales rose to 139.1 billion US dollars in the second quarter, from 108.6 billion US dollars a year earlier.

The increase was driven by higher crude oil, processed products, and chemical prices. The effect was greater than the decrease in sales volume.

The average realized price of Aramco crude oil jumped to 108.10 US dollars per barrel in the second quarter. This figure rose from 76.90 US dollars in the first quarter and 66.70 US dollars a year earlier.

Arab News said that during the first half, Aramco's adjusted net profit rose 29 percent year-on-year to 67.2 billion US dollars. Net profit rose 34 percent to 65.2 billion US dollars from 48.7 billion US dollars in the first half of 2025.

Aramco's Chief Financial Officer Ziad Al-Murshed said the results showed the resilience of the company's integrated business model.

"Our resilience stems from long-term planning over decades as well as our domestic and international strategic infrastructure, which provides flexibility and choice," Al-Murshed said.

Revenue and other income related to sales reached 263.7 billion US dollars in the first half, from 223.1 billion US dollars a year earlier. The average realized crude oil price rose to 90.10 US dollars per barrel from 71.50 US dollars.

However, free cash flow in the first half fell to US$30.9 billion from US$34.4 billion. The decline was mainly triggered by an increase in bills to the government and inventory, which held back the impact of profit growth.

Aramco paid a base dividend of $43.8 billion during the first half. Nasser said the approach to returning to shareholders was sustainable and progressive, despite the ongoing regional uncertainty.

In the upstream business, adjusted EBIT fell to $50.9 billion in the second quarter from $54.2 billion in the previous quarter. EBIT is profit before interest and taxes.

The decrease in the volume of crude oil sold and the increase in production royalties offset the benefits of higher prices. Total hydrocarbon production fell to 9.5 million barrels of oil equivalent per day from 12.6 million barrels in the first quarter.

In contrast, downstream businesses recorded adjusted EBIT of US$6.2 billion, up 25 percent quarter-on-quarter. The increase was supported by a stronger refining margin. The reliability of this segment's supply remained at 98.4 percent despite the turbulent region.

Aramco also signed an agreement to sell its entire stake in the PRefChem refining and petrochemicals joint venture in Malaysia to PETRONAS.

The construction of the Zuluf crude oil upgrading project and the expansion of the Fadhili Gas Plant continues. Each is targeted to be completed in 2026 and 2027.

The company also completed the issuance of a 4 billion US dollar international bond in February. As of June 30, Aramco had repurchased 83.8 million shares worth 0.61 billion US dollars.